Diamond Glass Inc. files for bankruptcy

KINGSTON – Faced with hefty loan and debt payments due Tuesday, Diamond Glass Inc. declared bankruptcy as a way to pay back its creditors and reorganize the privately held company.

Diamond voluntarily filed for Chapter 11 bankruptcy and president Bill Cogswell said the company founded in 1923 is still doing business as usual replacing and repairing automotive glass.

The filing in U.S. Bankruptcy Court for the District of Delaware listed $105 million owed on loans, notes and payments and nearly 90 percent of it payable on the first of the month.

The company has secured funding from one of its principal backers, Guggenheim Corporate Funding LLC, to continue operating while it reorganizes, he said.

Company officials held “face-to-face” meetings with employees at the Division Street headquarters and held conference calls with other employees throughout the country about the bankruptcy filing and restructuring plans, Cogswell said.

Diamond has an approximate 7 percent share of the annual $3.5 billion glass replacement market in the United States. The business has grown from a single store started by Avram Levine to a network of 217 service centers and 900 mobile installation vehicles in 42 states. Nationwide it employs approximately 1,600 people.

In 2005, the company projected $200 million in sales. The following year, however, it sustained its first operating and financial losses as insurance companies lowered payments and higher deductibles reduced claims for replacement glass. In-house efforts to improve the company’s performance also backfired, prompting it to make changes to correct the past missteps.

According to the plan submitted for approval by the bankruptcy court, Guggenheim will purchase Diamond. An auction will then be held with the intent to obtain a better offer than the one made by Guggenheim. The auction will take place in early June.

But if no one makes a better bid, Guggenheim will own the company, Cogswell said. In exchange for the ownership, a “significant portion of Guggenheim’s debt would be exchanged in part for ownership of Diamond.”

Diamond said it “expects Guggenheim would carry on the business substantially in the same manner as it is carried on today.”

Diamond owed Guggenheim approximately $45 million in loan payments, according to the bankruptcy filing. Another $47.3 million was due on notes issued to Diamond’s predecessor company, Diamond Triumph Auto Glass Inc. In addition, Diamond owed an estimated $13.1 million in unsecured trade debt.

In a prepared statement announcing the bankruptcy, Cogswell said the proposed sale to Guggenheim provides the “opportunity to remove a large obstacle to our future success.” He added he is “optimistic” Diamond will emerge “well positioned for profitable growth.”

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Firm cannot afford to pay nearly $90 million in debt due on April 1, president says.

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